THE FRANCHISE MODEL: A KICK TO THE BUSINESS

 

From a newly started Business (Startup) to a business with customer attraction and customer retention afterwards, From the generation of meagre amount of revenues towards a paramount stage of goodwill

“A Successful idea do not need attraction but

expansion to get retention”

 

 

Franchise is one of the best and easiest way to expand your business and its reach. There could be different sort of benefits to both the franchisor and the franchisee but the most important part amidst it is:

§  Expansion of business

§  Customer attention

§  Broader reach

§  Royalty and profits to the Franchisor and Earnings of the franchisee partner

Franchisor is the body that sells the right to sell its product to another person or party known as Franchisee. It is very important to establish a mutual respected and polite bond between the two bodies for feasible running of the business.

Before moving forward with the essential points, we need to first focus on the on the depth of this model as one of the main three types of franchise model are-

§  FOCO (Franchise Owned Company Operated)

§  FOFO (Franchise Owned Franchise Operated)

§  COCO (Company Owned Company Operated)

FOCO MODEL OF FRANCHISE-

In this specific model of franchise, there is one or two time investment by the interested party, takes some part of the profit and the rest is operated by the company itself. Here, Company take care of its brands by handling all the essential duties and responsibilities, the operational expenditure while all the capital expenditures are under the haven of franchisee. Franchisee act as a sleeping partner in this model.

Some of the key aspects of FOCO model-

§  If a company has expertise in doing business, this is the best possible way to do so. Company has its trademark, signages, business manuals safe within its pocket.

§  This model requires a lot of money to invest by the investor or the franchisee.

§  This model allows the company to handle all the significant operations and authority to prevent its goodwill.

§  The Investor or franchisee gets the ROI (Return on Investment) on the amount they have invested either company is enjoying profits or bearing losses.

§  The company is responsible to adhere the advertising, marketing, staff salary, other operating expenses and must give a fixed percentage of share from the profits to the franchisee.

 

FOFO MODEL OF FRANCHISE-

In this model, both the capital and operational expenditures are borne by the Franchisee. A fixed percentage in terms of Royalty is being given to the Master franchisor by the franchisee.

Here, the Franchisor constantly sees the performance of the Franchisee because the company forward its signages, trademarks, Brand details and by default the goodwill also. The company provides full support on how to manage the operations; guides the franchisee, also have regular audits to check the standard and the actual performance.

But the thing to focus keenly upon is that company is giving the autonomy to perform with its brand which could either be positively or negatively played. Company is forwarding all its brand value with trademark, that could be a threat to the goodwill of the Company if the franchise does not mark the performance with the standards.

 

COCO MODEL OF FRANCHISE-

This model says company is equally responsible to handle the capital as well as operational expenditure. In this type of franchise model, company have to invest both in the day to day activities and the long term expenditures on assets. Company operated both the headquarters and the chain of stores by itself.
This model needs strength in the beginning in order to attract the investors on its platform through more profitability, footfall of customers, customer retention, location of the stores, etc.

                                                                                ~ RAGHAV SRIVASTAVA